Optimism Abounds for Canadian Lobsters in China as Tariffs Drop

Foreign suppliers in China are stocking lobsters, preparing for price increases soon, especially with the onset of China’s summer vacation. The prices of live Boston lobsters have already risen slightly in several main markets from June 16 to 23. For example, in Shanghai the price of live lobsters between 450g to 500g each rose from 67 yuan/jin (1 jin=0.5 kg; $20.20/kg USD) to 74 yuan/jin ($22.31/kg USD). Meanwhile, the price of the large ones increased from 85 yuan/jin to 93 yuan/jin ($25.62-28.04/kg USD).

The situation is similar in Beijing and Guangzhou. According to one Boston lobster importer in Guangzhou, the prices are predicted to further increase later. Many foreign suppliers are stocking their lobsters, anticipating the rise in Chinese demand. Although there wasn’t much change to lobster prices during the past Dragon Boat Festival, orders from China have enjoyed obvious increase thanks to greater festival demand, said some foreign suppliers.

The lobster fishing season ended May 31 in Canada’s two main fishing regions. The fishing volumes are not large in the remaining regions. Most Canadian processing plants have begun to stock lobsters in preparation for the coming busy season.

The prospect is optimistic for the Boston lobster market after the ending of aslack consumption season but a busy fishing season from April to June. And in China, the summer vacation is coming and there will be more banquets and dinners like those hosted by parents whose children have just finished primary or high schools.

On June 16, China announced increased tariff rates by 25 percent on 659 commodities worth U.S. $50 billion imported from the U.S. Seafood such as lobsters, cod and tuna are on that list. Although this decision is to go into effect officially on July 6, it has already taken a toll on the import of Boston lobsters from the U.S.

Lobster imports from Maine have already dropped off because customs raised the lobsters’ sampling proportion, said one importer in Beijing. It has reached about 20 percent now, which means that the customs examines one lobster out of five. The whole process takes around two days and most lobsters don’t survive after sampling, so fewer lobsters are imported from America.

This has occurred to most of China’s markets and importers have cut their purchases as much as possible to avoid potential risks. Those in cities like Guangzhou now prefer to buy lobsters from Canada rather than America due to improved survival rates.

In addition, there has been a jump in the CIF prices of live and small lobsters, though there hasn’t much change to the large ones. For example, the CIF price was only $7.65 USD per pound in Beijing for lobsters weighing between 450g to 500g each last week, but it has increased to $8.50 USD per pound now. The price increase ranges between $0.70 to $0.90 USD per pound for small lobsters in markets like Shanghai, Guangzhou and Qingdao.

Though there is an increase in tariff rates on seafood from the U.S., the tariff rates dropped on products imported from its most favored nations from July 1 on. This is great news for lobster exporters in Canada. Their lobster tariff rate has dropped from the previous 10 percent to the current 7 percent. This is to motivate more exporters to clear lobsters through legal channels and diminish the competitiveness of border trade.

China’s customs has taken stricter measures to crack down on border trade since the beginning of this year. There is reduction in the number of live Boston lobsters imported to China through border trade in Vietnam, but it still exists. Normally lobster have been priced at more than 100 yuan/jin ($30.15/kg USD); now, however, they are cheaper due to such factors as border trade, said one Guangzhou importer.

It is still uncertain how tariff changes and customs sampling will influence the export of lobsters from the U.S. to China in the long term, but Canadian exporters are quite optimistic and they are getting ready for the bustling sales season of their lobsters.

The CIF prices are stable without much change for live lobsters from Canada from June 16 to 23. Inland cities like Kunming, Chongqing and Chengdu are buying lobsters from Beijing now, although there are direct flights between some of them and the suppliers. And there are only small quantities of companies that fly lobsters directly from foreign countries.

Because the demand is comparatively small in those inland cities, and Beijing is closer to Canada than most of them, the transportation fees are lower. In addition, Beijing lobster qualities are more satisfying with high survival rates, so many second-tier and third-tier cities like to buy from Beijing. Though lobsters are also of good quality in markets of Shanghai and Guangzhou, demand is greater there and there are fewer lobsters left for them to sell to others.